Revenue recognition based problem


Problem: In the month of March, the Digby Corporation received and delivered orders of 159,000 units at a price of $15.00 for revenue of $2.385mil for their product Daft. Digby uses the accrual method of accounting and offers 30 day credit terms. By the end of May Digby had collected payments of $2.385mil for the March deliveries. How much of the collected $2.385mil should Digby show on the March 31st income statement and how much on the May 31st income statement?

A. $2.385mil in March; $0 in May

B. $1.192mil in March; $1.192mil in May

C. $0 in March; $2.385mil in May

D. $0.787mil in March; $1.598mil in May

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Accounting Basics: Revenue recognition based problem
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